How to Track an Indemnity Cap After Close

How to track an indemnity cap is a remaining-ceiling ledger after the purchase agreement closes, not the basket threshold and not the escrow balance. For each deal, log the general cap copied from the agreement, which claim categories sit under it, which carve-outs sit outside it, each claim that counts toward the cap, the running aggregate paid or reserved, remaining room under the cap, and any specific caps that sit beside the general ceiling. Raziel's indemnity basket tracking page is when a general claim starts to pay. Raziel's escrow holdback tracking page is remaining dollars versus claims. This page is the maximum seller exposure for the covered set.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed indemnity article. Do not invent a market percent.

What this indemnity-cap ledger is (and is not)

An indemnification cap is the ceiling on seller liability for covered indemnity claims, usually stated as a dollar amount or a percent of purchase price. Morse's September 25, 2024 market note, citing the ABA Private Target M&A Deal Points Study (full year 2022 and Q1 2023), reports that nearly all deals with survival provisions included a cap, that 86% of those caps sat below the purchase price, that almost 40% of deals had caps in the 1% to 10% of purchase-price band, and that most R&W-insured deals had caps under 1% of purchase price. Wagner Hicks, summarizing the 2025 ABA Private Target Deal Points Study (139 acquisition agreements), reports a median indemnity cap of 0.25% of transaction value on deals with representations and warranties insurance, typically aligned with the RWI retention, versus traditional non-insured caps often described in the 8% to 12% range in the prior decade. Those figures are study snapshots. They are not your cap.

Seven columns on one indemnity-cap row

Open one row per purchase agreement (child rows if general, fundamental, tax, and special indemnities use different ceilings). Attach the indemnity article and any RWI binder.

• General cap copied. Dollar amount or percent of purchase price for general representation breaches. Morse: nearly all surveyed deals with survival had a cap; most R&W-insured caps sat under 1%. Copy yours. Store silent if the deal truly had no general cap.

• Categories under the general cap. Morse: 90% of surveyed caps covered seller representation breaches; covenant breaches and other indemnifiable matters were less often under the same ceiling. Copy which categories your article actually binds.

• Carve-outs outside the cap. Fraud, willful misconduct, and fundamental representations (authority, capitalization, title) often sit outside the general ceiling, or under a higher specific cap up to purchase price. Copy the carve-out list. Do not paste "fraud always uncapped" without reading the definition.

• Claims that count. Date, amount asserted or paid, whether the claim is a general-rep claim that runs against this ceiling, and whether a carve-out applies. Keep basket arithmetic on the basket row. Keep escrow dollars on the escrow row.

• Running aggregate toward the cap. Sum of counting claims paid or reserved against the general ceiling. Do not mix special-indemnity dollars into this cell unless the agreement says they share the same pot.

• Remaining room. Cap minus running aggregate. When room hits zero, further general claims do not create seller cash under that ceiling (subject to carve-outs and any RWI path).

• Specific caps / RWI note. Separate ceilings for tax, environmental, or other named risks, plus whether an RWI policy is the primary recovery path. Wagner Hicks: 63% of deals in the 2025 ABA study used RWI, and buyers increasingly covenant to keep the policy and treat RWI (plus any escrow) as the sole recovery source for covered indemnity claims. Copy what your paper says.

Copy the signed ceiling, not a 10 percent blog default

Do not paste "market is 10 percent" onto every deal. Wagner Hicks: RWI deals often show a tiny seller cap because the insurer holds the risk above the retention. A non-insured deal with an 8% to 12% style ceiling is a different book. A basket that has not been met does not mean the cap is irrelevant. An escrow that still has cash does not mean the seller's contractual ceiling has room left. Update this row when a claim is paid, settled, or reserved, then refresh basket and escrow.

When the ledger holds

The row holds if the seven cells are copied from the PDFs (or marked missing). It fails when you invent a percent, fold a fundamental carve-out into the general tally, or treat escrow release as proof the cap still has capacity. Raziel's MOIC calculator is only honest if indemnity recoveries and shortfalls have a date and a label. Raziel does not interpret your indemnity article. Copy the seven columns.